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EU and Korea shipbuilding Talks Stall

6/29/2001

The European Union will now almost certainly file a complaint with the World Trade Organization (WTO) over alleged South Korean shipbuilding subsidies, after talks between the two sides ended without agreement in Brussels. The delegations failed to narrow their differences over key issues such as price increases, what ship types the increases should be applied to and the length of time they remain in place. A WTO complaint could be filed as early as next Wednesday, told the EU. Europe wants Korean yards to unilaterally increase prices by 15%, but Korea has offered only a 5% increase.

European shipbuilders also want the mark-up to be applied to eight ship types, including ferries and LNG carriers. Korea wants to restrict it to just mid-sized containerships, chemical product carriers and petrochemical product carriers. The Korea Shipbuilders' Association (KSA) said on Wednesday it sincerely regretted "the EU's failure, in the negotiations held yesterday, to make a serious effort to reach an agreement and resolve this dispute." "Whilst channels remain open, and will continue to do so until the beginning of July, the KSA is afraid that the Commission's unfounded and contradictory demands make an agreement unlikely." But Reinhard Luken, secretary general of the European Shipbuilders Association CESA, hit back, saying the Korean statement sounded very much like a door being closed. "If the door is closed, then that's fine with us," he said. "We are surprised, but we are confident in our case. We had a clear position and we needed to see progress immediately, not a series of talks that might or might not lead somewhere," Luken added.

The KSA said that Korean shipbuilders understood their government tried to reach a solution, but European demands to include large containerships, LNG and LPG vessels in any agreement were not "based on any facts." It reiterated its belief that Korea and Europe do not compete in these market segments and added that demands for steep increases in a short time period are neither realistic nor achievable. It claimed the Commission demanded Korean shipbuilders commit to increase prices, but refused to similarly bind European shipbuilders, implying that they should be free to undercut Korean prices.